Photo, above: Aramco Airplane 1956 

JOHN BATCHELOR SHOW

Hour One

Saturday 22 March  2014 / Hour 1, Block A: Dancing with the Devil: The Perils of Engaging Rogue Regimes by Michael Rubin  (1 of 4)

Saturday 22 March  2014 / Hour 1, Block B: Dancing with the Devil: The Perils of Engaging Rogue Regimes by Michael Rubin  (2 of 4)

Saturday 22 March  2014 / Hour 1, Block C: Dancing with the Devil: The Perils of Engaging Rogue Regimes by Michael Rubin  (3 of 4)

Saturday 22 March  2014 / Hour 1, Block D: Dancing with the Devil: The Perils of Engaging Rogue Regimes by Michael Rubin  (4 of 4)

Hour Two

Saturday 22 March  2014 / Hour 2, Block A: America's Great Game: The CIA’s Secret Arabists and the Shaping of the Modern Middle East by Hugh Wilford (1 of 4)

Saturday 22 March  2014 / Hour 2, Block B:  America's Great Game: The CIA’s Secret Arabists and the Shaping of the Modern Middle East by Hugh Wilford (2 of 4)

Saturday 22 March  2014 / Hour 2, Block C:  America's Great Game: The CIA’s Secret Arabists and the Shaping of the Modern Middle East by Hugh Wilford (3 of 4)

Saturday 22 March  2014 / Hour 2, Block D:  America's Great Game: The CIA’s Secret Arabists and the Shaping of the Modern Middle East by Hugh Wilford (4 of 4)

Photo, right: A photograph taken in 1947 in Dhahran shows the first king of modern Saudi Arabia, Abdul Aziz Ibnsaud, center left, with James McPherson, the president of the Arabian American Oil Co., Aramco, center right.

. . . In 1948 Kuwait granted to Aminoil, a US company, a 60-year oil concession. The price for the concession was based on a fixed royalty for every ton of oil recovered. The Concession Agreement contained a stabilization clause that prevented Kuwait from unilaterally annulling or altering the terms of the Agreement.

In 1961 Kuwait and Aminoil supplement the fixed-royalties principle of the Concession Agreement with a 50/50 profit-sharing arrangement. In 1973 the parties agreed on another set of changes to the Concession Agreement further increasing the Government’s ‘take’. Although the 1973 Draft Agreement was never ratified by the Kuwaiti parliament, in a separate letter the parties agreed to apply the agreement as if it was ratified. Subsequently, Kuwait demanded to further increase its ‘take’ under the ‘Abu Dhabi formula’ agreed by the OPEC countries. Aminoil did not consent and in 1977 Kuwait nationalized the concession with an envisaged payment of ‘fair’ compensation.

On the basis of a separate arbitration agreement, Aminoil initiated arbitration proceedings contesting the nationalization as contrary to the stabilization clause. Aminoil also challenged the 1973 agreement and the ‘Abu Dhabi formula’ and claimed damages of almost US$ 3 billion (largely lost profits until 2008). Kuwait counterclaimed and requested the sums allegedly owed to it by Aminoil under the 1973 agreement and the ‘Abu Dhabi formula’.

The Tribunal found that both 1973 Draft Agreement and ‘Abu Dhabi formula’ were valid and applicable to Aminoil’s concession. The Tribunal further determined that the nationalization was lawful and did not violate the stabilization clause, as the latter prevented only ‘confiscatory nationalizations’. The Tribunal held that in accordance with the 1962 UN Resolution, Aminoil was entitled to ‘appropriate compensation’. The latter was calculated by the Tribunal on the basis of Aminoil’s assets valued using their replacement cost (the net book value method was rejected as inadequate) and Aminoil’s value as a going concern estimated on the basis of Aminoil’s legitimate expectations of a reasonable rate of return. The resulting amount was decreased by Aminoil’s debt to Kuwait, leaving US$ 83 million in compensation. This amount was adjusted to account for inflation; compound interest was awarded. 

Hour Three

Saturday 22 March  2014 / Hour 3, Block A: The Last Refuge: Yemen, al-Qaeda, and America's War in Arabia byGregory D. Johnsen  (1 of 4)

Saturday 22 March  2014 / Hour 3, Block B: The Last Refuge: Yemen, al-Qaeda, and America's War in Arabia byGregory D. Johnsen  (2 of 4)

Saturday 22 March  2014 / Hour 3, Block C: The Last Refuge: Yemen, al-Qaeda, and America's War in Arabia byGregory D. Johnsen  (3 of 4)

Saturday 22 March  2014 / Hour 3, Block D: The Last Refuge: Yemen, al-Qaeda, and America's War in Arabia byGregory D. Johnsen  (4 of 4)

Hour Four

Saturday 22 March  2014 / Hour 4, Block A: Invisible Armies: An Epic History of Guerrilla Warfare from Ancient Times to the Present by Max Boot  (1 of 4)

Saturday 22 March  2014 / Hour 4, Block B:  Invisible Armies: An Epic History of Guerrilla Warfare from Ancient Times to the Present by Max Boot  (2 of 4)

Saturday 22 March  2014 / Hour 4, Block C:  Invisible Armies: An Epic History of Guerrilla Warfare from Ancient Times to the Present by Max Boot  (3 of 4)

Saturday 22 March  2014 / Hour 4, Block D: Invisible Armies: An Epic History of Guerrilla Warfare from Ancient Times to the Present by Max Boot  (4 of 4)

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